India Faces Risks from Trump’s BRICS Tariff

As Donald Trump gears up for a potential second term as US President, his protectionist trade policies have already started causing ripples in the global economy. A major part of his strategy involves imposing 100% tariffs on BRICS countries, including India, if they reduce their reliance on the US dollar for international transactions. With the BRICS nations, including India, discussing the possibility of de-dollarisation, Trump’s comments present a serious challenge for India’s export sectors, including pharmaceuticals, textiles, and IT services. 

Trump’s Protectionist Trade Policies

• Trump has threatened to impose 100% tariffs on BRICS countries, including India, if they move away from using the US dollar in global trade. This is part of his broader protectionist approach to safeguard the US dollar’s dominance.

BRICS Summit on De-dollarisation

• During a summit held in October in Russia, BRICS nations (Brazil, Russia, India, China, South Africa) discussed reducing reliance on the US dollar for trade, which led to Trump’s strong response.

India’s Economic Ties with the US

• The US is India’s largest trading partner, with bilateral trade exceeding $120 billion in FY24.
• India’s diverse export portfolio to the US includes pharmaceuticals, textiles, engineering goods, and IT services.
• Any tariff hikes could make Indian products less competitive in the US market.

India’s Cautious Approach to De-dollarisation

• While India is exploring alternatives to the dollar, the Indian government has made it clear that de-dollarisation is not a part of the country’s economic policy.
• India’s Foreign Minister S. Jaishankar stated that India’s strategy revolves around finding alternatives when specific obstacles arise, not a full-scale move away from the dollar.

Trump’s Tariff Threats and India’s Position

• Trump’s tariff threat is not new, as he has previously criticised India for its high tariffs. However, his personal relationship with Prime Minister Modi might mitigate some of the damage, as both leaders could engage in negotiations to safeguard India’s economic interests.

Global Economic Impact

• The global economy is already feeling the effects of Trump’s protectionist policies. A trade war between the US and major economies, including BRICS nations, could destabilize global markets, causing a decline in demand for exports and slowing down economic growth.

Shifts in Supply Chains

• Trump’s “China+1” strategy has led to businesses relocating operations to India. While this offers opportunities for India, the broader economic slowdown and the imposition of tariffs could counteract these benefits, especially for sectors reliant on the US market.

Risks for India’s Export Sectors

• India’s key export sectors, including pharmaceuticals, textiles, and IT services, could face significant challenges. Higher tariffs could reduce the competitiveness of Indian goods in the US market, potentially leading to lower trade volumes and economic slowdowns.

India’s Strategy Moving Forward

• India will need to balance maintaining strong trade ties with the US while exploring alternatives to the dollar. The country’s growth strategy will have to navigate the challenges posed by global economic instability and tariff hikes.

Summary/Static	Details
Why in the news?	Donald Trump’s 100% BRICS Tariff Plan
Trump’s Tariff Threats	Threat to impose 100% tariffs on BRICS countries, including India, for moving away from the US dollar.
BRICS De-dollarisation Discussions	BRICS countries, including India, are exploring alternatives to the US dollar for trade.
India-US Trade Relationship	The US is India’s largest trading partner with over $120 billion in bilateral trade (FY24).
India’s Approach to De-dollarisation	India is cautious about de-dollarisation and focuses on finding alternatives when necessary.
Trump’s Criticism of India	Trump has criticized India’s high tariffs and threatened reciprocal tariffs in the past.
Impact on India’s Export Sectors	Key sectors like pharmaceuticals, textiles, and IT could face higher costs and reduced competitiveness.
Global Economic Impact	Trump’s protectionism could destabilize global markets, slowing economic growth.